Point of law: The award would be vitiated by patent illegality if such illegality was at the root of the matter

JUDGMENT :

VIBHU BAKHRU, J

1. The petitioner (hereafter “SOWIL”) has filed the present petition impugning the Arbitral Award dated 10.11.2021 (hereafter the “impugned award”) passed by the Arbitral Tribunal comprising of a Sole Arbitrator (hereafter the “Arbitral Tribunal”). The said award was rendered in the context of disputes that have arisen between the parties in connection with an agreement dated 28.10.2014 (hereafter the “Agreement”).

Factual Background

2. SOWIL is a company incorporated under the Companies Act, 1956. The respondent (hereafter “IHMC”) is also an incorporated company and is engaged in providing services pertaining to management of toll collection on national highways through electronic toll systems. IHMC is, inter alia, engaged in the activity of assessing the volume of traffic on National Highways; to standardize the process of data collection; and, for creating a central data repository through traffic surveys using portable Automatic Traffic Counter-cum-Classifiers (hereafter “ATCC”).

3. The Ministry of Road, Transport and Highways (hereafter “MORTH”), Government of India had instructed IHMC to conduct traffic surveys at around 1600 locations on National Highways in India.

4. IHMC issued a Request for Proposal (hereafter “RFP”) for engaging agencies to conduct ATCC on sections of National Highways in seven different zones, twice a year, for a period of five years (ten rounds of traffic surveys). The surveys were required to be conducted at traffic survey locations to be specified. SOWIL submitted its bid pursuant to the RFP and was awarded the contract for executing the work in respect of Zone-5 (Odisha, West Bengal and North-Eastern States). On 28.10.2014, the parties entered into the Agreement for carrying out the aforesaid work. SOWIL commenced the work in terms of the Agreement on 28.11.2014.

5. During the years 2014 to 2017, SOWIL completed five rounds of surveys at certain specified locations. SOWIL claims that IHMC had delayed notifying the final list of survey locations from the third round onwards.

6. On 30.06.2017, IHMC once again invited tenders for conducting surveys (ATCC) at 284 locations in Zone-5 (which was now restricted to the States of Orissa and West Bengal).

7. Admittedly, IHMC delayed notifying the locations for conducting the sixth round survey. SOWIL claims that IHMC specified the locations in a piecemeal manner rendering the task unworkable at the material time.

8. On 08.03.2018, IHMC issued a Notice Inviting Tenders for the work relating to the balance four rounds of ATCC. At the material time, SOWIL was awaiting information regarding the workable locations for conducting the sixth round survey.

9. Aggrieved by the invitation of fresh tenders for the remaining four rounds, SOWIL filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereafter the “A&C Act”) being OMP(I)(COMM) No.169 of 2018. The said petition was listed before this Court on 19.04.2018 and this Court passed an order restraining IHMC from terminating the Agreement. On 24.04.2018, this Court passed another interim order restraining IHMC from entering into any agreement pursuant to the Notice Inviting Tenders dated 08.03.2018.

10. In view of the disputes between the parties, SOWIL issued a notice dated 26.05.2018 under Section 21 of the A&C Act invoking the Arbitration Agreement for adjudication of the disputes under the Agreement. In the meanwhile, in August 2018, SOWIL completed the survey of the sixth round.

11. Thereafter on 10.08.2018, SOWIL filed a petition under Section 11 of the A&C Act [ARB.P. No. 593 of 2018]. While the said petitions [ARB.P. No.593/2018 and OMP(I)(COMM) No.169/2018] were pending before this Court, the parties attempted to amicably resolve their disputes. It is stated that during the course of the meeting to resolve the disputes, IHMC made an offer for conducting the balan